The Hidden Cost of Manual Document Management

"Without access to information there is no transparency; without transparency there is no accountability; and without transparency and accountability there is no democracy." - Dr. Harrison Mwakyembe, Senior Lecturer in Law from the University of Dar es Salaam.

Many food manufacturing companies, even large ones, still run their food safety and quality management systems using manual documents and spreadsheets. This is costing such businesses a lot of time and money and leading to preventable business, technical and quality problems.

To illustrate this point I will use the following conservative information for a medium sized food business. You can scale up or down according to your situation:

Example Medium Sized Food Business:

• Number of Suppliers: 25, with 10 documents per supplier (e.g. certification, food safety policy, audit reports, etc.) = 250 documents.
• Number of Raw Materials: 40, with 10 documents per material (e.g. certificate of analysis, raw material specification, HACCP plan, etc.) = 400 documents.
• Number of Finished Products: 20, with 25 documents per finished product (e.g. finished product specification, certificate of analysis, traceability records, production records, HACCP plan, etc.) = 500 documents.
• Number of Employees in Technical / QA: 3 with an average salary for technical / QA: ￡30,000 / $45,000
• Number of Internal ‘SOP’ Documents: 50
• Total documents to manage: 250 + 400 + 500 + 50 = 1200

Assuming 20% of time is spent managing documents: Every hour an employee spends creating, amending, reviewing, approving and searching for documents costs money. Many technical and quality personnel spend a significant amount of time doing these tasks. Assuming 20% of their time is spent managing documents this means, in our example, that the total cost of this activity will be ￡18,000 or $27,000 per year for our fictitious food company.

"Every hour an employee spends creating, amending, reviewing, approving and searching for documents costs money."

Assuming 20% of document management time is spent searching for documents: A further 20% of staff time can easily be spent just searching for documents in folders and in email. We’ve all been there. Nothing is more frustrating or stressful when you have a deadline. Occasionally, these documents need to be re-created from scratch at an average cost of $122, according to PWC. Even on these assumed figures, assuming a document can be found in seconds rather than minutes could save anywhere from ￡2000 or $3000 per year in labour costs in the technical and quality department alone. For larger businesses, this number can multiplied accordingly.

"Just being able to find information efficiently could save anywhere from ￡2000 or $3000 per year."

This is not the whole story however; there is a very large and hard to quantify cost associated with delays associated with document approval and review. Poor document approval processes may result in slower than expected new product development or result in a critical project delay which affects time to market. These factors directly affect the planned rate of business growth.

"Poor approval processes may result in slower than expected new product development or a critical project delay."

Sending printed documents for manual approval, or even by email, means that people need to stop what they are doing to give specific attention to these tasks. Manual document approvals interrupt work flow so people tend to put these tasks off until they can get a clear spot in their day. For many, the clear spot never comes. The result is delay after delay and the approval, or review, does not get dealt with in a timely manner. Electronic approvals are gathered in one place and can easily be reviewed and approved quickly and efficiently and email notifications are sent instantly to the author, saving the need to write an email to confirm the approval.

"Manual document approvals interrupt work flow so people tend to put these tasks off until they can get a clear spot in their day."

There is also a cost to document non-conformity as a result of an audit. Audit non conformity is often caused by a document that is out of date or where staff are using an incorrect version of a documented procedure. Sometimes it is simply not being aware of the correct procedure or where to access it. These are common issues that are picked up during audits. Such issues often result in time consuming meetings after the audit to discuss and correct the problems raise, tying up multiple members of staff and consuming their valuable time.

"Audit non conformity is often caused by a document that is out of date or staff are using an incorrect version of a documented procedure."

Finally, there is the cost of storage of these 1200+ documents. Over multiple years this adds up to a significant but hidden sum. Storage cost for filing cabinet space, hard disk space on file servers or email servers are significant likely to be in the range of thousands per year when you work it all out (which I am not going to do here).

"Storage cost for filing cabinet space, hard disk space on file servers or email servers are significant likely to be in the range of thousands per year."

In our example, I would suggest that it is not unreasonable to conservatively assume that the cost of inefficient document management is likely to be at least ￡5000 or $7500 per year for a medium sized business. For some businesses it will be lower, for others it may be a much higher number.

"The Minimum Cost of Manually Approving Documents: ￡5,000 or $7,500 per year."

The Value of an Integrated Approach to Document Management

Implementing an integrated approach to document management means getting everyone on to a single system where they can collaborate effectively and transparently. It’s value to a food business is incalculable but it is clear from the example given above that investment in an collaborative approach directly affects the standards, communication and profitability of a food business.

There is also a significant area of value to be generated in the collaboration, transparency and "connectedness" of the information and the rich data that can be gathered. Understanding where the bottlenecks are and flagging them with those responsible leads to accountability and a culture of getting things done. If getting things done increases by even a small amount like 10% this can have a major knock on effect on the long term growth and prospects of a business.

At Primority, our 3iVerify solution is an integrated food safety and quality management system. It can be applied to all of the above scenarios and provides an affordable way to realise maximum efficiencies in food safety and quality processes.

"Our 3iVerify solution is an integrated food safety and quality management system."

Contact us to discuss how we can help you take an integrated approach to food safety.